SUBORDINATION AGREEMENT
EXHIBIT
10.3
THIS
SUBORDINATION AGREEMENT (“Agreement”) dated
June __, 2009, is made by and among the Investors listed on Schedule A hereto
(singly and collectively, “New Lender”),
Advaxis, Inc., a Delaware corporation (“Borrower”) and Xxxxxx
X. Xxxxx (“Subordinating
Creditor”).
WHEREAS,
the New Lender and the Borrower are parties to a Note Purchase Agreement, dated
the date hereof, pursuant to which, among other things, the New Lender has made
certain loans to the Borrower which are secured by, among other things security
interests in substantially all of the now-owned and hereafter-acquired assets of
the Borrower (the “New
Loan”); and
WHEREAS,
the Borrower is indebted to the Subordinating Creditor under a promissory note
dated September 22, 2008, as amended on December 15, 2008 and in connection
herewith issued by the Borrower to the Subordinating Creditor (the “Junior Note”);
and
WHEREAS,
the New Lender and the Subordinating Creditor wish to confirm their agreements
and understandings with respect to the relative priorities of their respective
claims against the Borrower and its assets as more particularly set forth
herein;
NOW,
THEREFORE, the parties hereto, for good and valuable consideration, the receipt
of which is hereby acknowledged, hereby agree as follows:
1. Subordination.
(a) Subordinating
Creditor hereby expressly subordinates and makes inferior in priority,
operation, and effect the obligations of Borrower to Subordinated Creditor
pursuant to the Junior Note (but no other obligations) and all modifications,
renewals, extensions, consolidations, and substitutions thereof (the “Subordinated
Indebtedness”) to the obligations owing by Borrower to New Lender
pursuant to the New Loan (the “Protected
Indebtedness”).
(b) The
New Lender acknowledges that the Notes provide that Borrower pay to the
Subordinating Creditor certain payments of interest and principal, as more fully
provided in the Junior Note (the “Permitted Payments”),
including without limitation payments of accrued interest and principal pursuant
to the Junior Note. The New Lender hereby agrees that the Company may
pay to the Junior Creditor, and the Junior Creditor may accept from the Company,
the Permitted Payments as and when due and payable in accordance with the Junior
Note, provided that no event of default under the Protected Indebtedness (a
“New Debt Event of
Default”) has occurred or would occur upon the making of such Permitted
Payment. If a New Debt Event of Default occurs, New Lender will act in a
commercially reasonable manner to notify Borrower and Subordinating Creditor of
such fact; provided that New Lender’s failure to provide such notification will
not waive or affect any such existing New Debt Event of Default; and provided
further that neither Borrower nor Subordinating Creditor will be in breach of
this Agreement if a Permitted Payment is made or received and applied after a
New Debt Event of Default but before Borrower or Subordinating Creditor have
actual knowledge of same. For all purposes of this Agreement, no
Protected Indebtedness shall be deemed to have been paid in full until the New
Lender shall have received payment in full in immediately available
funds.
2. Covenants of Subordinating
Creditor. Subordinating Creditor hereby agrees as
follows:
(a) In
order to enable the New Lender to enforce its rights hereunder, Subordinating
Creditor will do all acts necessary or convenient to preserve for the
New Lender the benefits of this Agreement, and will execute all
agreements which the New Lender may request for that purpose. Upon a New Debt
Event of Default, the New Lender is hereby authorized, but shall not be
obligated, to do any one or more of the following in the name of Subordinating
Creditor or otherwise: (i) demand, collect, compromise, and receive payment of
the Subordinated Indebtedness or any part thereof; (ii) make, prove, and vote
any and all claims in respect of the Subordinated Indebtedness of Subordinating
Creditor in any proceeding (formal or informal) with respect to the bankruptcy
reorganization, arrangement, insolvency, liquidation, or other similar relief of
Borrower, or any guarantor or hypothecator, including without limitation, voting
such claims at any meeting of creditors, and including without limitation,
voting to accept or reject any plan of reorganization in such proceeding; (iii)
receive all payments or dividends on such claims; (iv) accept any new securities
or other property to which Subordinating Creditor would otherwise be entitled in
respect of such claims under any such plan of reorganization or proceeding; and
(v) in general, do any act in connection with the obligations or proceedings
which Subordinating Creditor might do, it being understood that New Lender shall
account to Subordinating Creditor for any such payment or dividend received by
the New Lender in excess of the amount necessary to satisfy the Protected
Indebtedness in full with interest, and including reasonable attorneys’ fees
incurred in connection with the claim and this Agreement. Subordinating Creditor
hereby irrevocably constitutes and appoints New Lender as its true and lawful
attorney for the purposes set forth above.
(b) Subordinating
Creditor agrees that it will provide New Lender with notice of any default or
event of default under the Subordinated Indebtedness of which it becomes aware
and, upon request by New Lender, will furnish New Lender with statements of
account for the Subordinated Indebtedness and will make all records of
Subordinating Creditor relating thereto available to New Lender.
(c) The
Subordinating Creditor agrees that, so long as this Agreement is in effect, it
will not, without the prior written consent of the New Lender, (i) commence,
prosecute or participate in any administrative, legal or equitable action, or
(ii) take any other enforcement action, or assert any right or remedy whatsoever
against Borrower or any of its subsidiaries, whether under applicable law, in
any bankruptcy proceeding or otherwise, unless, in the case of each such action
(hereinafter an “Enforcement Action”),
at or prior to the time at which the Subordinating Creditor wishes to take such
Enforcement Action, all Protected Indebtedness shall have been indefeasibly paid
in full and all commitments in respect of the New Loan shall have
terminated. Notwithstanding the foregoing, the limitations set forth
in this Section 2(c) shall not apply to the Subordinating Creditor following (i) the
occurrence and continuance of a default in a Permitted Payment for a period of
10 days or more or (ii) the date that is 10 days after the commencement of
foreclosure proceedings (including judicial foreclosure and non-judicial
foreclosure by the sending of a public sale notice or a private sale notice, or
by acceptance of collateral in full or partial satisfaction of the Protected
Indebtedness) by the New Lender under the Note Purchase
Agreement. Any and all proceeds or recoveries from any such
collection efforts by Subordinating Creditor shall be subject to the provisions
of this Agreement, and if received by Subordinating Creditor, held in trust and
turned over to New Lender.
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3. Term of
Agreement. This Agreement shall be irrevocable and shall
remain in effect until the Protected Indebtedness shall have been converted or
paid in full pursuant to the terms thereof.
4. Disgorgement or Payments in
Bankruptcy or Otherwise. In the event any part of the
Protected Indebtedness is paid by Borrower or otherwise, and, by virtue of any
bankruptcy or other laws relating to creditors’ rights, the New Lender repays
any amounts to Borrower or to any trustee, receiver, or otherwise, then the
amount repaid shall again become part of the Protected Indebtedness for the
purposes of this Agreement, and this Agreement, if terminated, shall
revive.
5. Notices. All
notices or demands by any party relating to this Agreement or any other
agreement entered into in connection herewith shall be in writing and (except
for financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by a
recognized overnight delivery service, certified mail, postage prepaid, return
receipt requested, or by telefacsimile to the New Lender or to the Borrower, as
the case may be, at its addresses set forth in the Note Purchase Agreement, and
to the Subordinating Creditor at the address provided below. The
parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the
other.
If to the
Subordinating Creditor:
Technology
Centre of New Jersey
000 Xx.
0, Xxxxx X000
Xxxxx
Xxxxxxxxx, XX 00000
Attention:
Xx. Xxxxxx X. Xxxxx
With a
copy to:
Xxxxxxxxx
Xxxxxxx, LLP
The
MetLife Building
000 Xxxx
Xxxxxx
Xxx Xxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxx, Esq.
Fax
Number: 000-000-0000
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6. Miscellaneous
(a) This
Agreement shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York, excluding those laws relating to the
resolution of conflicts between laws of different jurisdictions.
(b) In
any litigation in connection with or to enforce this Agreement, Borrower and
Subordinating Creditor irrevocably consent to and confer personal jurisdiction
and exclusive venue on the state and federal courts sitting in The City of New
York, Borough of Manhattan, expressly waive any objections as to venue in such
courts, and agree that service of process may be made on Subordinating Creditor
by mailing a copy of the summons and complaint by registered or certified mail,
return receipt requested, to their respective addresses.
(c) In
the event that any one or more of the provisions of this Agreement is determined
to be invalid, illegal, or unenforceable in any respect as to one or more of the
parties, all remaining provisions nevertheless shall remain effective and
binding on the parties thereto and the validity, legality, and enforceability
thereof shall not be affected or impaired thereby.
(d) The
singular shall include the plural and any gender shall be applicable to all
genders when the context permits or implies. If more than one party constitutes
Borrower, their obligations under this Agreement shall be joint and several and
the term “Borrower” shall mean all such parties and any one or more of them. If
more than one party constitutes Subordinating Creditor, their obligations under
this Agreement shall be joint and several and the term Subordinating Creditor,
shall mean all such parties and any one or more of them. Any party executing
this Agreement shall be bound by the terms hereby without regard to execution by
any other party and the failure of any party to execute this Agreement shall not
release or otherwise affect the obligations of the party or parties who do sign
this Agreement.
(e) No
action which the New Lender, or Borrower with the consent of the New Lender, may
take or refrain from taking with respect to the Protected Indebtedness, any
notes evidencing the same, any collateral therefore, or any agreement or
agreements (including guaranties), in connection therewith, shall affect this
Agreement or the obligations of the Subordinating Creditor hereunder. Without
limiting the generality of the foregoing, Subordinating Creditor hereby
authorizes New Lender without notice or demand and without affecting
Subordinating Creditor’s obligations under this Agreement, from time to time:
(i) to renew, extend, increase, accelerate, or otherwise change the time for
payment of the principal of or the interest on the Protected Indebtedness or any
part thereof; (ii) to take from any party and hold collateral for the payment of
the Protected Indebtedness, or any part thereof, and to exchange, enforce, or
release such collateral or any part thereof; (iii) to accept and hold any
endorsement or guarantee of payment of the Protected Indebtedness or any part
thereof and to release or substitute any endorser or guarantor or any party who
has given any security interest in any collateral as security for the payment of
the Protected Indebtedness or any part thereof or any other party in any way
obligated to pay the Protected Indebtedness; and (iv) to direct the order or
manner of the disposition of any of the collateral and the enforcement of any of
the endorsements and guaranties relating to the Protected Indebtedness or any
part thereof as New Lender in its discretion may determine.
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(f) This
Agreement may be signed in any number of separate counterparts, no one of which
need contain all of the signatures of the parties, and as many of such
counterparts as shall together contain all of the signatures of the parties
shall be deemed to constitute one and the same instrument. Any
subsequent lender which is designated a New Lender may sign a joinder to this
Agreement and become a party hereto by such joinder.
(g) No
delay or omission by the New Lender in exercising any right or remedy under this
Agreement shall operate as a waiver of that right or remedy or of any other
right or remedy and no single or partial exercise of any right or remedy shall
preclude any other or further exercise of that or any other right or
remedy.
(h) All
rights and remedies of the New Lender hereunder and under any other loan
documents are cumulative, and are not exclusive of any rights or remedies
provided by law or in equity, and may be pursued singularly, successively, or
together, and may be exercised as often as the occasion therefore shall arise.
The warranties, representations, covenants, and agreements made herein and
therein shall be cumulative, except in the case of irreconcilable inconsistency,
in which case the provisions of the credit agreement, or if none, the promissory
note or notes evidencing the Protected Indebtedness, shall control.
(i) The
provisions of this Agreement shall, as to Borrower, Subordinating Creditor, and
the New Lender, supersede any subordination provisions contained in the
Subordinated Indebtedness or any part thereof.
(j) This
Agreement may not be modified or amended nor shall any provision of it be waived
except by a written instrument signed by the party against whom such action is
to be enforced.
(k) The
titles and headings preceding the text of sections of this Agreement have been
included solely for convenience of reference and shall neither constitute a part
of this Agreement nor affect its meaning, interpretation, or
effect.
(l) This
Agreement shall be binding upon and inure to the benefit of the New Lender, its
successors and assigns, and shall be binding upon both Borrower and
Subordinating Creditor and their respective heirs, legal representatives,
successors, and assigns; provided, however, that no rights or obligations of
Borrower or Subordinating Creditor hereunder shall be assigned without the prior
written consent of New Lender. This Agreement shall not benefit any other
creditors of Borrower that do not hold Protected Indebtedness.
BORROWER,
NEW LENDER, AND SUBORDINATING CREDITOR HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION
WITH THE OBLIGATIONS OF BORROWER TO THE NEW LENDER, OR ANY COURSE OR CONDUCT,
COURSE OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN), OR ACTION OF ANY
PARTY. BORROWER AND SUBORDINATING CREDITOR ACKNOWLEDGE THAT THE NEW
LENDER HAS MADE NO REPRESENTATION THAT THE NEW LENDER WILL REFRAIN FROM
ENFORCING THIS PROVISION. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE NEW LENDER TO ENTER INTO THE TRANSACTIONS INVOLVING BORROWER.
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IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of date first
written above.
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SUBORDINATING
CREDITOR:
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XXXXXX
X. XXXXX
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By:
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Name:
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Title:
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BORROWER:
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By:
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Name:
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Title:
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NEW
LENDER:
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[_________________]
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By:
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Name:
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Title:
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